US merchandise-trade deficit shrinks on decline in imports

The US merchandise-trade deficit shrank in May by more than expected as the value of imports slid by the most in six months.

The shortfall in goods trade narrowed 6.1% to $91.1 billion, Commerce Department data showed Wednesday. The figure, which isn’t adjusted for inflation, compared with a $93.7 billion median estimate in a Bloomberg survey of economists.

Imports fell 2.7% to about $254 billion, also the lowest since November and led by a drop in consumer goods. Exports declined 0.6% to $162.8 billion, reflecting a decrease in outbound shipments of food and industrial supplies.

Though a narrowing of the trade deficit for most of 2022 proved to be a key tailwind to gross domestic product last year, economists don’t expect net exports to provide that kind of support again in the near term. The pace of import growth will depend on consumer and business demand, which has so far proved resilient.

Meanwhile, foreign purchases of US-made goods has eased in recent months as the global economy cools in the face of higher borrowing costs.

US exports of autos jumped 8.7% in May, the most since the start of the year, while outbound shipments of consumer goods rose 4.3%.

Prior to Wednesday’s trade figures, the Atlanta Fed’s GDPNow forecast had net exports subtracting 0.7 percentage point from second-quarter gross domestic product.

The Commerce Department report showed retail inventories rose 0.8% last month, the most this year, to $778.7 billion. Inventories at car dealers jumped 2.9%, the biggest gain since August. Stockpiles at wholesalers fell 0.1% to the lowest level since September.

More complete May trade figures that include the balance on the services account are due July 6.